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A New Wealth Management Dimension
The Reinsurance of Gift Annuities
A charitable gift annuity is a contractual arrangement between a donor and a charity. The donor makes an irrevocable gift in exchange for fixed payments for life. The charity issues the gift annuity agreement and places the donated funds into a separate account on behalf of the named annuitant. The charity can then either self-insure or reinsure its payout obligation while making the stipulated payments to the annuitant for life.
The Program allows charities the opportunity to reinsure their gift annuity payout obligations with selected insurance companies so that the remainder of the gift is available immediately. The Program also allows charities to take advantage of the perpetual, cost-free planned giving capabilities of financial services professionals.
The purchase of a single premium immediate annuity contract by a charity from an insurance company. The insurance company guarantees that the lifetime payments which the charity has obligated itself to through a gift annuity agreement will be paid directly to the charity on the same periodic basis as the payout obligation which the charity has made to the named annuitant. The remainder, the amount donated less the reinsurance premium, is available to the charity immediately.
Governmental regulations require charities which self-insure gift annuities to reserve 100% of the risk, effectively restricting the use of the remainder of the amount contributed until the annuitant’s death. However, in most states, should 100% of the gift annuity risk be reinsured by an authorized insurance company, no reserves are required.
No Income Tax Deduction.
All interest income is 100% taxable as ordinary income.
The interest rate is relatively low.Sale of a capital asset to purchase the CD may generate capital gains taxation.
No charitable intent is setisfied.
Principal may be available for use.
At death, heirs may receive the principal.
Substantial income tax deduction of $41,015(2)
A large potion of the annual payment is tax free: 82% ($4,756)(1)(3)
The payout is relatively high: 5.8% ($5,800)(3)
Sale by the charity of a donated capital asset can minimize capital gains taxation.(4)
Charitable desires can be satisfied.
Not FDIC Insured.
Access to the value of the gift is no longer possible.
Empowering Charities to create and use new planned giving $$$ immediately.
Empowering Donors to create and use new cash flow to satisfy other financial needs.
• Satisfy other financial needs by using increased cash flow generated from tax savings and partially tax-free payments.
• Satisfy the number one concern of retirees; will they outlive their money.
• Convert low-yielding assets into a series of high tax-advantaged lifetime payments.
• Benefit from tax deductions while appointing others to receive annuity payments.
• Avoid estate tax on contributed assets.
• Convert investment risk assets into high guaranteed lifetime payments.
• Offset taxable income from other sources.
• Provide future educational funding for others while receiving a current tax deduction.
• Payout obligation from the charity is reinsured by a quality insurance company.
• Increase future lifetime payout amounts by deferring the payout start date.
The Conversion Of Deferred Gifts
Into Immediate Gifts
• Create new cash flow for immediate use.
• Generate untapped donor opportunities while establishing new advisor relationships.
• Use the perpetual planned giving power of our National Financial Advisory Network.
• Use the remainder for and fund-raising activities while fulfilling key initiatives of the charity.
• Reinsure an existing portfolio of self-insured gift annuities, releasing a portion of existing reserves immediately.
• Reduce administrative costs and other requirements of self-insured gift annuity programs.
• Reap the benefits of a reinsured gift
annuity program, without the frustrations of establishing and
maintaining a program, by using our Network of “supporting” Community
No Legal Costs ~ No Market Risk
Income Tax Deduction ~ Estate Tax Exempt
Creating and Using New Planned Giving $$$ Immediately
• Perpetual planned giving opportunities through our National Financial Advisory Network
• New funds made available immediately
• Minimal administration costs
• Access to our portfolio of quality insurance companies
• Establishes new “advisor” relationships
• Generates new untapped donor opportunities
Based on a single annuitant charitable gift annuity and ACGA rates as
of 1/1/2012 for age at income commencement, adjusted for deferral, if
any. 2) Assumes a 28% Tax Bracket. Annuity exclusion ratio. 3) Based on 1.6% 4) Assumes a 4 yr. accelerated payout is exercised by annuitant. 5) May be subject to gift tax. 6)
Annuity payments are part return of principal (non-taxable), part
capital gain (if any) and part ordinary income. Once principal is
recovered and/or capital gains are paid, remaining annuity payments
then become fully taxable as ordinary income. If certain requirements
are met, the donor may recognize any capital gain ratably over the
time period the annuity is expected to be received. Assumes a 15%
capital gains tax rate. 7) Insured using a single premium immediate annuity product.